New CEO lays out a vision for Nautic

New Nautic Global Group CEO Jim Malone (right) talks business with Marine Retailers Association of the Americas president Matt Gruhn.

Polar Kraft is in a great position to grow, a fact that new Nautic Global Group CEO Jim Malone has not overlooked.

“I believe that with Polar Kraft we’ve got a gem in the making and it has not had the attention it deserves,” Malone said when the company hosted a meeting in December with some key dealers and members of the boating press. “It’s a terrific product, and I think it’s in a terrific position to grow market share.”

Malone was named chairman and CEO in October after serving as a consultant to the company. His background includes a history of turning flailing companies around (see Q&A, Page 8), and he does not have a typical approach when it comes to connecting with the extensive and diverse dealer network for the company’s brands, which include Godfrey pontoons, Hurricane deckboats, Parti Kraft pontoons, Polar Kraft and Rinker.

Few CEOs will invite the press to hear what they have to say and take unfiltered questions from the entire dealer network. But Malone did just that without dodging the sometimes tough and critical questions that moderator Matt Gruhn, president of the Marine Retailers Association of the Americas, lobbed at him.

When Gruhn said many dealers think that lead times are “not what they should be,” Malone responded that the current production schedule “is 20 percent higher than it was this time last year. We are dramatically increasing our throughput on Hurricanes [deckboats] and pontoons,” he said. “That is up over 30 percent.”

And progress, he said, is being made on “the nagging quality issues and detail stuff that are a pain in the neck to the dealer network.

“They’re not very happy with us to deal with these small issues — and fortunately they are small issues, but they’re aggravating to deal with. Part of that is ramp-up speed. We’re redoing our labor force in terms of flow. This has got to be a place where people want to come and work and stay.”

The increase in capacity will translate into shorter and more definitive lead times, Malone said. “Often what has been more aggravating is sometimes to be told what the lead time is and then not have the product there,” he said.

Ramping up after the recession

Manufacturing contracted during the recession, and some plants at the South Bend, Ind., facility had been used for storage facilities or simply lay idle, said marketing director Steve Tadd. “So now the time has come to maximize our manufacturing footprint and do it in a way that adjusts for the types of products that are now in demand, relative to 2006. It has changed. Deckboats have been on fire, so we’re expanding there, and since sterndrive has been soft we’ve used work force and facility space to make up for shortcomings elsewhere.

“Jim mentioned the goal is to double Hurricane’s production and make a significant increase in our ability to produce pontoon boats,” Tadd continued. “We stumble on ourselves here during the springtime” when everything is ramping up. “For the past two years it’s gotten to the point where we’re doing everything we can to manufacture as many boats as we can, but the plant itself was the constraint. Now production of those boats will be in multiple facilities on the same campus.”

Nautic Global Group is looking to significantly increase its ability to produce pontoon boats.

The company is now building pontoon boats in the huge Polar Kraft facility, which is capable of building 10 times what it’s producing now, Tadd said. “So as that business grows — and it’s growing — we just keep turning things on for backup there and building pontoon boats there, which is not something we’ve done before. It’s just a right-sizing of the manufacturing footprint.

“I can tell you that with the recession there was a hesitancy to overdo it when it came to turning things back on,” Tadd added. “Jim has created a different vision — sort of ‘It’s time to go get it.’ And it’s across-the-board, whether it’s engineering, customer service, parts, marketing — every department has grown.”

At the lowest point in the recession, the company had 350 employees. Now there are more than 800, and NGG expects to add potentially hundreds more as the spring approaches and capacity increases, Tadd said.

“Part of our goal is to make it easier for dealers to continue buying throughout the year and try and manage the business in a way that doesn’t result in a large ramp-down and up,” he said. “That’s what drives quality issues. When you have a steady work force, you don’t have the quality issues. As much as we can even out the manufacturing ebbs and flows, it will improve our quality. Short of that, there’s been a big investment in personnel that ensures a consistent level of high quality in product going out the door.”

Clearing a backlog on parts

Malone said Nautic also wants to stay in closer contact with the dealer network and have a dialogue over specific issues.

Homing in on one dealer issue, Gruhn said, “It’s no secret that it’s been a struggle to get parts.”

Malone’s answer seemed to catch at least some dealers in the room of about 25 off guard.

“Last year, I’m ashamed to tell you that our total parts sales were 2 million lousy dollars,” he said. “What does that say? That says dealers found other ways to buy parts because we haven’t been as responsive as we need to be. For dealers, that ought to be a profit center, and it ought to be a profit center for us.”

Nautic Global Group manufactures several pontoons including the Aqua Patio 240 SL.

Already in his short tenure, the backlog of parts has been reduced from 1,800 to 349, Malone said, “but it still makes me crazy that we’ve got 349 late parts. As long as dealers can’t think of us first to handle parts, that will be a profit area that is lost for us.”

Despite the increase in capacity, the company plans to shift more to a pull strategy rather than push, he said.

“In any great organization you’ve got natural tension in a positive way between manufacturing capabilities and selling capabilities,” Malone said. “Until recently, you’ve been able to sell more than we’ve been able to make conveniently. We’re about to flip that and — based on selling — be able to pull that instead of push through the process.”

Having more capacity means sales guide production and also means that penetration gets deeper so the company doesn’t find it has outgrown its ability to do that, he said. “That’s what I mean by push and pull,” Malone said. “The more consistency, product and product control, the more reliability overall. Dealers are going to get product when we told them we’d get them, and we all have an increased ability to plan with a higher level of certainty.”

Malone also seemed to score with dealers in the room when he said he wants them to be empowered to act when something does go wrong.

“Part of the cultural transformation we’re talking about is, people have to be … encouraged to make a decision and get on with it, with the idea that you are never going to get in trouble by error of commission, rather than error of omission — by not doing anything,” he said. “Through this train wreck of an economy, things were done that hurt everybody. We survived, if not thrived, through that era. So we’re in a position to be able to go after those things that, although on paper are small in nature, there are too many of them.

“A big aspect of it … is the communication with you and your people, and we haven’t done as good a job as we could have done,” Malone said as dealers nodded. “A lot of that is empowering people. When the company was struggling there were a lot of restrictions on what people could do and what they couldn’t do.”

Nautic Global Group has a 75 percent share of the outboard deckboat market and a 50 percent share of the overall deckboat market, but that’s not enough for Malone. “We only enjoy 75 percent of market share, so obviously there’s room for growth,” he said.

Dealer reaction

After the discussion, dealers seemed impressed by Malone and the changes he promised.

“I have a really, really warm, fuzzy feeling about him,” said Wayne Johnson of Rockingham Boat Repair in New Hampshire. I think he’s going in the right direction. I think he’s the type of person that employees will embrace.”

Fred Pace, co-owner of Legendary Marine, which recently earned the No. 1 dealer title from Boating Industry magazine for the second year in a row, said he views Malone as part of a new regime at what has been a very successful company.

“We hope he’ll bring new ideas and greater levels of communication and repair things that need fixing,” Pace said. “We think he’s going to surround himself with some really smart people to handle day-to-day operations, the marketing, all the different aspects. What I think Jim will bring to Nautic Global is a lot of years of managing successful companies and the knowledge of how to put the right people in the right places.

“Over the last 12 to18 months we experienced a few more quality issues than in the past, and parts delay issues more than in the past, so we’re really looking for a change in that process,” Pace said. “I would add that I think the dealers went up there a little bit on edge because of some of the issues that have occurred, and I think they came away with a feeling that, maybe things aren’t going to get fixed immediately, but that Nautic Global is going to be very responsive and that Jim Malone is going to be the guy going to lead that company … to greater things.”

This article originally appeared in the February 2014 issue.

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